As part of the ongoing discussions for the 2025-26 federal budget, the International Monetary Fund (IMF) has urged Pakistan to increase the Capital Gains Tax (CGT) on property transactions.
Sources say the proposed hike could raise the CGT rate from the current 15% to as high as 40%, bringing it in line with the corporate income tax rate.
The virtual negotiations between the Ministry of Finance, the Federal Board of Revenue (FBR), and the IMF continue today. The IMF is pushing for broader tax reforms aimed at enhancing tax-to-GDP ratio, which is being targeted at 11% in the upcoming budget. Expenditures, meanwhile, are projected to be 20.3% of GDP.
FBR officials argue that large profits made from real estate transactions are currently taxed at lower rates, making it necessary to raise CGT on property sales. However, concerns are also being raised that a steep hike in CGT could lead to a decline in real estate transactions.
In a move to balance the impact, there’s also a proposal to reduce taxes on first-time property purchases, according to sources. This could help support genuine buyers while still addressing revenue concerns.
As negotiations with the IMF continue, key fiscal policy decisions — including revisions in tax structures — are expected to shape the final budget document.
